Q. Who is eligible for deduction u/s 80E?
A. Loan should be taken by individual for pursuing higher education of
self, spouse or his /her Children’s. Hence parents are also eligible to claim
deduction of interest paid by them on loan taken for their children’s education. This deduction is not available to HUF.
Q. What is eligible amount?
A. Only interest paid on an educational loan is allowed as deduction
u/s. 80E of The Income Tax Act, 1961, out of his/her income chargeable to tax
i.e. Deduction will be allowed only when actual interest is paid.
Q. How much amount is deductible?
A. There is no limit for amount of repayment of interest. Unlimited
amount of interest can be deducted under this section. However there is no
benefit available on the repayment of principal amount of the loan. The
assesse can claim the amount of interest in the initial assessment year & carry
forward up to 7 assessment years.
Deduction is allowed for a continuous period of eight years, starting
with initial assessment year in which the assessee starts paying the
interest on the loan or until the interest is paid in full whichever is
earlier.
Q. Can loan be taken for any education?
A. The loan should be taken for the purpose of higher education.
Q. Can higher studies be pursued outside India?
A. There is no
condition that the course should be in India.
Q. Can loan be taken from relatives?
A. The loan should be taken from any financial
institution or any approved charitable institution. Interest on Loan taken from
relatives or friends will not be eligible for deduction under section 80E.
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Contact us @ cabipinkothari@gmail.com
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